Clear Channel Communications, Inc. (CCU)

Clear Channel Communications, Inc. is a media company with three operating segments namely radio broadcasting, outdoor advertising - Americas and international. The radio- broadcasting segment contributes maximum to the overall revenues i.e. around 54% in first nine months of 2006, while rest is being shared up others.

The radio industry has had a tough year in 2006 with a soft advertising market and increased competition from satellite radio, mp3 players and Ipods. With both Sirius and XM Radio entering into partnerships with major car manufacturers in America, it looks like terrestrial radio will take a backseat in this year. But despite all these factors Clear Channel fared good with revenues from radio, showing a 5% increase in the first nine months. But the future of radio advertising does appear quite grim with growth of only 1 % predicted over the next five years (down from the earlier forecast of 2 to 3 %). This might severely affect advertising rates of companies like Clear Channel in the future.

Clear Channel announced in November that it intended to sell 448 of its 1150 radio stations outside the top 100 US markets as well as its 42 station television group. In the same month the company was also acquired by Bain Capital Partners for $37.60 per share which offers a very low premium to the shareholders. It has to be noted that the company has lost around 60% of its market value since 2000 which makes this acquisition look even more ominous.

The outdoor segment is performing well and Clear Channel has entered into an agreement with NBC to sell advertisements on monitors installed in taxis in the first half of 2007. In the future the company has said that it will be paying a lot more attention to its online platform and not just the terrestrial platform. They have also said that they are formulating strategic alternatives for the future. But nothing concrete has been announced in terms of a clear strategy to indicate that the company will beat the tough market conditions and competition in 2007.